Modern Myths and Fables: Are Taxes Really as Bad as They Say?

dane_smithDane Smith writes about a new book by a Minnesotan that debunks the proposition that the more money we keep away from government, the freer we are.

“If freedom varies with the portion of our income we keep,” Handelman observes in the book, “then we were freer in 1900.
“Yet most of us, I suspect, would prefer the freedom we had in 2000 … The capacity to exercise choice is an important part of our freedom and there is no question that the number and quality of choices increased over the century … (And) that growth would not have been possible without significant investments in the public sector.”

Here is Dane’s article:

Smith: If taxes are bad for us, then how did we get so healthy, wealthy and wise?
By Dane Smith, Guest Commentary
July 9, 2009
Here’s a tax-and-budget Question for the Century, as we brace ourselves in Minnesota this summer for continued cuts to our state and local governments, all in the holy cause of not raising state income taxes ever again under any circumstances whatsoever.
Answer this: If government and taxes are so bad for growth and general prosperity, why did we grow so much and get so generally prosperous over the last century, a period during which government and taxes grew exponentially – especially in Minnesota?” (Read More)

I came across this article reading Charlie Quimby’s blog, “Across the Great Divide” where he writes about what’s happening from the ground level. I first met Charlie in the early ’70s when he was a student at Carleton College. I was a few years younger and a student at St. Olaf but we had mutual friends. I enjoy Charlie’s insights and his perspective, in the same blog entry he mentioned Smith’s article he made reference to this article as well:

Small Business, Big Fable
By Steven Pearlstein
Wednesday, July 8, 2009

One of the most enduring lies in American politics is the myth of small-business job creation.

You probably know it by heart: Small businesses create 60, 70, even 80 percent of all the new jobs in the United States.

Back in the 1980s, I was a senior editor at Inc. magazine, where I worked on some of the articles in which some of the seeds of this myth were planted. Up to that point, there was a widespread tendency to conflate the success of the economy with the fortunes of big business, so it was rather useful to have some data highlighting the importance of small firms.

By now, however, that analysis of net job creation has been repeated and embellished and oversimplified by so many lobbyists and politicians that it is only a matter of time before the magic number swells to 100 percent of job creation and small businesses will be demanding to be exempted from all taxes, all regulation and the Ten Commandments.

This is not the time or place for a long statistical explanation. Suffice it to say that, in terms of new job creation, the data show that most of it happens in a small number of very fast-growing companies that are no longer what most of us would consider small. There are lots of reasons for the success of these fast-growing firms, among them the ingenuity and hard work of their founders, the availability of capital and a culture that celebrates risk-taking. (Read more)

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